Friday, May 1, 2015

Home Buyer Tips: What is a "maybe letter?"

When making an offer to buy a home the seller is looking for some confidence the transaction will actually close. The "maybe letter" will not do it.

There really is nothing in the home buying process officially called a "maybe letter." It is just a moniker I use when referring to a mortgage pre-qualification letter.

Buyers seeking to buy a home should have a mortgage pre-approval letter which is very different from a mortgage pre-qualification. Pre-qualification letters can be easily printed off the Internet.

There is a world of difference between a mortgage pre-approval and mortgage pre-qualification.

A mortgage pre-qualification involves a basic screening processthat usually consists of cursory reviews of a potential buyer's income, liabilities, credit
history,etc. The mortgage pre-qualification process will provide a general idea of one's ability to obtain
a mortgage.

The mortgage pre-approval process involves lender review of documents provided by prospective borrowers. These documents may include pay stubs, tax returns, credit reports, verification of income and employment history and possibly more.

The bottom line. With pre-approval there is a verified ability to obtain a mortgage at a certain amount provided the right property is located (condition, appraised value, contracted price, etc) and circumstances do not change.

As the Brevard County, Florida real estate market heats up there is a greater likelihood of buyers finding themselves in multiple offer situations. Be ready.

Sellers most often choose to accept the offer that offers the greatest chance of closing [fewest contingencies, best supporting documentation like pre-approval or proof of funds letters), sooner closing].